exv10w4






EXHIBIT 10.4




TOREADOR RESOURCES CORPORATION

2005 LONG-TERM INCENTIVE PLAN

INCENTIVE STOCK OPTION AGREEMENT




     1. Grant of Option. Pursuant to the Toreador Resources Corporation 2005 Long-Term
Incentive Plan (the “Plan”), as adopted by Toreador Resources Corporation, a Delaware corporation
(the “Company”), the Company grants to



Nigel J. Lovett

(the “Participant”)



who is an employee of the Company, an option (sometimes referred to herein as the (“Stock Option”)
to purchase from the Company a total of 38,070 full shares of Common Stock, $0.15625 par value per
share, of the Company (the “Optioned Shares”) at an “Option Price” equal to $ 7.88 per share (being
the Fair Market Value per share of the Common Stock on this Date of Grant or 110% of such Fair
Market Value, in the case of a ten percent (10%) or more stockholder as provided in Section 422 of
the Internal Revenue Code of 1986, as amended (the “Code”)), in the amounts, during the periods and
upon the terms and conditions set forth in this Agreement.




     The “Date of Grant” of this Stock Option is May 15, 2008. The “Option Period” shall commence
on the Date of Grant and shall expire on the date immediately preceding the tenth (10th)
anniversary of the Date of Grant (or the date immediately preceding the fifth (5th)
anniversary of the Date of Grant, in the case of a ten percent (10%) or more stockholder as
provided in Section 422 of the Code). The Stock Option is intended to be an Incentive Stock
Option.



     2. Subject to Plan. This Stock Option and its exercise are subject in all respects to
the terms and conditions of the Plan, and the terms of the Plan shall control to the extent not
otherwise inconsistent with the provisions of this Agreement. The defined terms used herein that
are defined in the Plan shall have the same meanings defined for and assigned to them in the Plan.
In addition, this Stock Option is subject to any rules promulgated pursuant to the Plan by the
Board or the Committee and communicated to the Participant in writing.



     3. Vesting; Time of Exercise. Except as otherwise provided in the Plan or as
specifically provided elsewhere in this Agreement, this Stock Option shall be vested and
exercisable no sooner than as follows:



	 	 	 
	Exercise Date	 	Number of Shares
	1. One (1) year from the Date of Grant

	 	Up to 33.33% of the total Optioned Shares
under the Stock Option
	 
	 	 
	2. Two (2) years from the Date of Grant

	 	Up to an additional 33.33% of the total
Optioned Shares under the Stock Option
	 
	 	 
	3. Three (3) years from the Date of Grant

	 	Up to an additional 33.34% of the total
Optioned Shares under the Stock Option






 









 





2005 Long-Term Incentive Plan

Incentive Stock Option Agreement — Lovett

May 15, 2008

2



provided, however, that in the event of: (i) the Participant’s death; (ii) the
Participant’s Termination of Service by reason of Total and Permanent Disability; or (iii) during
the Employment Term (as defined in the Employment Agreement dated March 12, 2008 by and between the
Company and the Participant, as may be amended (the “Employment Agreement”), the occurrence of a
Change in Control and, following such Change in Control: (A) the Participant’s Termination of
Service by the Company without Cause; (B) the Participant is demoted from the positions of Chief
Executive Officer and President; or (C) the Participant’s authorities, powers, functions,
responsibilities or duties attached to the Participant’s position with the Company which the
Participant held on March 12, 2008 are materially reduced, all shares of Common Stock under this
Stock Option which have not previously vested and become exercisable shall automatically be
accelerated and become vested and exercisable in full, without regard to the vesting limitations
set forth above.




     4. Term; Forfeiture.




	 	(a)	 	Except as otherwise provided in this Agreement, to the extent the unexercised
portion of this Stock Option relates to Optioned Shares that are not vested on the
Participant’s Termination of Service, the Stock Option will terminate on such date.
The unexercised portion of this Stock Option that relates to Optioned Shares that are
vested will terminate at the first to occur of the following:






	 	(i)	 	5 p.m. on the date the Option Period terminates;
	 
	 	(ii)	 	5 p.m. on the date which is twelve (12) months following the
date of the Participant’s Termination of Service with the Company or an
Affiliate by reason of the Participant’s death or Total and Permanent
Disability;
	 
	 	(iii)	 	Immediately upon the Participant’s Termination for Cause (as
defined herein);
	 
	 	(iv)	 	5 p.m. on the date which is three (3) months following the date
of the Participant’s Termination of Service for any reason other than as set
forth in subparagraphs (a)(ii) or (a)(iii) above of this Section 4.
	 
	 	(v)	 	5 p.m. on the date the Company causes any portion of the Stock
Option to be forfeited pursuant to Section 7 hereof.






	 	(b)	 	For purposes of this Sections 3 and 4, “Cause” shall mean (i) the
Participant’s commission of a dishonest or fraudulent act in connection with the
Participant’s employment, or the misappropriation of Company property; (ii) the
Participant’s conviction of, or plea of nolo contendere to, a felony or crime involving
dishonesty; (iii) the Participant’s inattention to duties, unsatisfactory performance,
or failure to perform the Participant duties hereunder, provided in each case the
Company gives the Participant written notice and thirty (30) days to correct the
Participant’s





 









 





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Incentive Stock Option Agreement — Lovett

May 15, 2008

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	 	 	 	performance to the Company’s satisfaction; (iv) a substantial failure to comply with
the Company’s policies; (v) a material and willful breach of the Participant’s
fiduciary duties in any material respect, provided in each case the Company gives
the Participant written notice and thirty (30) days to correct; (vi) the
Participant’s failure to comply in any material respect with any legal written
directive of the Board; or (vii) any act or omission of the Participant which is of
substantial detriment to the Company because of the Participant’s intentional
failure to comply with any statute, rule or regulation, except any act or omission
believed by the Participant in good faith to have been in or not opposed to the best
interest of the Company (without intent of the Participant to gain, directly or
indirectly, a profit to which the Participant was not legally entitled). Any
determination of whether an the Participant should be terminated for Cause pursuant
to this Agreement shall be made in the sole, good faith discretion of the Board, and
shall be binding upon all parties affected thereby.





     5. Who May Exercise. Subject to the terms and conditions set forth in Sections 3
and 4 above, this Stock Option may be exercised during the lifetime of the Participant only by
the Participant or by the Participant’s guardian or legal representative. If the Participant’s
Termination of Service is due to death or Total and Permanent Disability prior to the termination
date specified in Section 4(a)(i) hereof, the following persons may exercise this Stock
Option on behalf of the Participant at any time prior to the earlier of the dates specified in
Sections 4(a)(i), (ii) or (v) hereof: (i) if the Participant has a Total and Permanent
Disability, the Participant or the guardian of the Participant; or (ii) if the Participant dies,
the personal representative of the Participant’s estate or the person who acquired the right to
exercise this Stock Option by bequest or inheritance or by reason of the death of the Participant;
provided that this Stock Option shall remain subject to the other terms of this Agreement, the
Plan, and applicable laws, rules and regulations.



     6. Restrictions on Exercise. This Stock Option may be exercised in whole or in part,
but only with respect to full shares of Common Stock, and no fractional share of stock shall be
issued. In no event may this Stock Option be exercised or shares of Common Stock be issued
pursuant to this Agreement if any registration under state or federal securities laws required
under the circumstances has not been accomplished.



     7. Manner of Exercise. Subject to such administrative regulations as the Committee
may from time to time adopt, the Stock Option may be exercised by the delivery of written notice to
the Committee setting forth the number of shares of Common Stock with respect to which the Stock
Option is to be exercised, the date of exercise thereof (the “Exercise Date”) which shall be at
least three (3) days after giving such notice unless an earlier time shall have been mutually
agreed upon, and whether the Optioned Shares to be exercised will be considered as deemed granted
under an Incentive Stock Option as provided in Section 11. On the Exercise Date, the
Participant shall deliver to the Company consideration with a value equal to the total Option Price
of the shares to be purchased, payable as follows: (a) cash, check, bank draft, or money order
payable to the order of the Company, (b) Common Stock (including Restricted Stock) owned by the
Participant on the



 









 





2005 Long-Term Incentive Plan

Incentive Stock Option Agreement — Lovett

May 15, 2008

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Exercise Date, valued at its Fair Market Value on the Exercise Date, and which
the Participant has not acquired from the Company within six (6) months prior to the Exercise Date, (c) by
delivery (including by FAX) to the Company or its designated agent of an executed irrevocable
option exercise form together with irrevocable instructions from the Participant to a broker or
dealer, reasonably acceptable to the Company, to sell certain of the shares of Common Stock
purchased upon exercise of the Stock Option or to pledge such shares as collateral for a loan and
promptly deliver to the Company the amount of sale or loan proceeds necessary to pay such purchase
price, and/or (d) in any other form of valid consideration that is acceptable to the Committee in
its sole discretion. In the event that shares of Restricted Stock are tendered as consideration
for the exercise of the Stock Option, a number of shares of Common Stock issued upon the exercise
of the Stock Option equal to the number of shares of Restricted Stock used as consideration
therefor shall be subject to the same restrictions and provisions as the Restricted Stock so
tendered.




     Upon payment of all amounts due from the Participant, the Company shall cause certificates for
the Common Stock then being purchased to be delivered as directed by the Participant (or the person
exercising the Participant’s Stock Option in the event of his Total and Permanent Disability or his
death) at its principal business office promptly after the Exercise Date. The obligation of the
Company to deliver shares of Common Stock shall, however, be subject to the condition that, if at
any time the Committee shall determine in its discretion that the listing, registration, or
qualification of the Stock Option or the Common Stock upon any securities exchange or inter-dealer
quotation system or under any state or federal law, or the consent or approval of any governmental
regulatory body, is necessary as a condition of, or in connection with, the Stock Option or the
issuance or purchase of shares of Common Stock thereunder, the Stock Option may not be exercised in
whole or in part unless such listing, registration, qualification, consent, or approval shall have
been effected or obtained free of any conditions not reasonably acceptable to the Committee.



     If the Participant fails to pay for any of the Optioned Shares specified in such notice or
fails to accept delivery thereof, that portion of the Participant’s Stock Option and right to
purchase such Optioned Shares may be forfeited by the Company.



     8. Non-Assignability. This Stock Option is not assignable or transferable by the
Participant in any form or fashion except by will or by the laws of descent and distribution.



     9. Rights as Stockholder. Except for the adjustment in the number of shares of Common
Stock as provided in Section 10 below, the Participant will have no rights as a stockholder
with respect to any Optioned Shares until the issuance of a certificate or certificates to the
Participant for the shares of Common Stock. The Optioned Shares shall be subject to the terms and
conditions of this Agreement. Except as otherwise provided in Section 10 below, no
adjustment shall be made for dividends or other rights for which the record date is prior to the
issuance of such certificate or certificates.



 









 





2005 Long-Term Incentive Plan

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     10. Adjustment of Number of Shares and Related Matters. The number of shares of
Common Stock covered by the Stock Option, and the Option Prices thereof, shall be subject to
adjustment in accordance with Articles 11 – 13 of the Plan.



     11. Incentive Stock Option. Subject to the provisions of the Plan, this Stock Option
is intended to be an Incentive Stock Option. To the extent the number of Optioned Shares exceeds
the limit set forth in Section 6.3 of the Plan, such Optioned Shares shall be deemed
granted pursuant to a Nonqualified Stock Option. Unless otherwise indicated by the Participant in
the notice of exercise pursuant to Section 7, upon any exercise of this Stock Option, the
number of exercised Optioned Shares that shall be deemed to be exercised pursuant to an Incentive
Stock Option shall equal the total number of Optioned Shares so exercised multiplied by a fraction,
(i) the numerator of which is the number of unexercised Optioned Shares that could then be
exercised pursuant to an Incentive Stock Option, and (ii) the denominator of which is the then
total number of unexercised Optioned Shares.



     12. Disqualifying Disposition. In the event that Common Stock acquired upon exercise
of this Stock Option is disposed of by the Participant in a “Disqualifying Disposition,” such
Participant shall notify the Company in writing within thirty (30) days after such disposition of
the date and terms of such disposition. For purposes hereof, “Disqualifying Disposition” shall
mean a disposition of Common Stock that is acquired upon the exercise of this Stock Option (and
that is not deemed granted pursuant to a Nonqualified Stock Option under Section 11) prior
to the expiration of either two years from the Date of Grant of this Stock Option or one year from
the transfer of shares to the Participant pursuant to the exercise of this Stock Option.



     13. Specific Performance. The parties acknowledge that remedies at law will be
inadequate remedies for breach of this Agreement and consequently agree that this Agreement shall
be enforceable by specific performance. The remedy of specific performance shall be cumulative of
all of the right and remedies at law or in equity of the parties under this Agreement.



     14. The Participant’s Representation. Notwithstanding any provision to the contrary
herein, the Participant hereby agrees that he will not exercise this Stock Option, and that the
Company will not be obligated to issue any shares of Common Stock to the Participant hereunder, if
the exercise thereof or the issuance of such shares of Common Stock shall constitute a violation by
the Participant or the Company of any provision of any law or regulation of any governmental
authority. Any determination in this connection by the Company shall be final, binding, and
conclusive. The obligations of the Company and the rights of the Participant are subject to all
applicable laws, rules, and regulations.



     15. Investment Representation. Unless the shares of Common Stock are issued to the
Participant in a transaction registered under applicable federal and state securities laws, by his
execution hereof, the Participant represents and warrants to the Company that all Common Stock
which may be purchased hereunder will be acquired by the Participant for investment purposes only
for his own account and not with any intent for resale or distribution in violation of federal or
state



 









 





2005 Long-Term Incentive Plan

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May 15, 2008

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securities laws. Unless the Common Stock is issued to him in a transaction registered under
the applicable federal and state securities laws, all certificates issued with respect to the
Common Stock shall bear an appropriate restrictive investment legend and shall be held
indefinitely, unless they are
subsequently registered under the applicable federal and state securities laws or the
Participant obtains an opinion of counsel, in form and substance satisfactory to the Company and
its counsel, that such registration is not required.




     16. The Participant’s Acknowledgments. The Participant acknowledges receipt of a copy
of the Plan, which is annexed hereto, and represents that he or she is familiar with the terms and
provisions thereof, and hereby accepts this Stock Option subject to all the terms and provisions
thereof. The Participant hereby agrees to accept as binding, conclusive, and final all decisions
or interpretations of the Committee or the Board, as appropriate, upon questions arising under the
Plan or this Agreement.



     17. Law Governing. This Agreement shall be governed by, construed, and enforced in
accordance with the laws of the State of Texas (excluding any conflict of laws rule or principle of
Texas law that might refer the governance, construction, or interpretation of this Agreement to the
laws of another state).



     18. No Right to Continue Employment. Nothing herein shall be construed to confer upon
the Participant the right to continue in the employment of the Company or interfere with or
restrict in any way the right of the Company to discharge the Participant at any time (subject to
any contract rights of the Participant).



     19. Legal Construction. In the event that any one or more of the terms, provisions,
or agreements that are contained in this Agreement shall be held by a court of competent
jurisdiction to be invalid, illegal, or unenforceable in any respect for any reason, the invalid,
illegal, or unenforceable term, provision, or agreement shall not affect any other term, provision,
or agreement that is contained in this Agreement and this Agreement shall be construed in all
respects as if the invalid, illegal, or unenforceable term, provision, or agreement had never been
contained herein.



     20. Covenants and Agreements as Independent Agreements. Each of the covenants and
agreements that is set forth in this Agreement shall be construed as a covenant and agreement
independent of any other provision of this Agreement. The existence of any claim or cause of
action of the Participant against the Company, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by the Company of the covenants and agreements
that are set forth in this Agreement.



     21. Entire Agreement. This Agreement together with the Plan and the Employment
Agreement supersede any and all other prior understandings and agreements, either oral or in
writing, between the parties with respect to the subject matter hereof and constitute the sole and
only agreements between the parties with respect to the said subject matter. All prior
negotiations and agreements between the parties with respect to the subject matter hereof are
merged into this



 









 





2005 Long-Term Incentive Plan

Incentive Stock Option Agreement — Lovett

May 15, 2008

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Agreement and the Employment Agreement. Each party to this Agreement acknowledges
that no representations, inducements, promises, or agreements, orally or otherwise, have been made
by any party or by anyone acting on behalf of any party, which are not embodied in this Agreement,
the Plan
or the Employment Agreement and that any agreement, statement or promise that is not contained
in this Agreement, the Plan or the Employment Agreement shall not be valid or binding or of any
force or effect.




     22. Parties Bound. The terms, provisions, and agreements that are contained in this
Agreement shall apply to, be binding upon, and inure to the benefit of the parties and their
respective heirs, executors, administrators, legal representatives, and permitted successors and
assigns, subject to the limitation on assignment expressly set forth herein.



     23. Modification. No change or modification of this Agreement shall be valid or
binding upon the parties unless the change or modification is in writing and signed by the parties.
Notwithstanding the preceding sentence, the Company may amend the Plan or revoke this Stock Option
to the extent permitted by the Plan.



     24. Headings. The headings that are used in this Agreement are used for reference and
convenience purposes only and do not constitute substantive matters to be considered in construing
the terms and provisions of this Agreement.



     25. Gender and Number. Words of any gender used in this Agreement shall be held and
construed to include any other gender, and words in the singular number shall be held to include
the plural, and vice versa, unless the context requires otherwise.



     26. Notice. Any notice required or permitted to be delivered hereunder shall be
deemed to be delivered only when actually received by the Company or by the Participant, as the
case may be, at the addresses set forth below, or at such other addresses as they have theretofore
specified by written notice delivered in accordance herewith:




	 	a.	 	Notice to the Company shall be addressed and delivered as follows:
	 
	 	 	 	Toreador Resources Corporation

13760 Noel Rd., Suite 1100

Dallas, Texas 75240

Attn: Chief Executive Officer

Facsimile: 214-559-3945

	 
	 	b.	 	Notice to the Participant shall be addressed and delivered as
set forth on the signature page.





     27. Tax Requirements. The Participant is hereby advised to consult immediately with
his or her own tax advisor regarding the tax consequences of this Agreement. The Company or, if



 









 





2005 Long-Term Incentive Plan

Incentive Stock Option Agreement — Lovett

May 15, 2008

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applicable, any Subsidiary (for purposes of this Section 27, the term “Company” shall be
deemed to include any applicable Subsidiary), shall have the right to deduct from all amounts
hereunder paid in cash or other form, any Federal, state, local, or other taxes required by law to
be withheld in
connection with this Award. The Company may, in its sole discretion, also require the
Participant receiving shares of Common Stock issued under the Plan to pay the Company the amount of
any taxes that the Company is required to withhold in connection with the Participant’s income
arising with respect to this Award. Such payments shall be required to be made when requested by
the Company and may be required to be made prior to the delivery of any certificate representing
shares of Common Stock. Such payment may be made (i) by the delivery of cash to the Company in an
amount that equals or exceeds (to avoid the issuance of fractional shares under (iii) below) the
required tax withholding obligations of the Company; (ii) if the Company, in its sole discretion,
so consents in writing, the actual delivery by the exercising Participant to the Company of shares
of Common Stock which shares so delivered have an aggregate Fair Market Value that equals or
exceeds (to avoid the issuance of fractional shares under (iii) below) the required tax withholding
payment; (iii) if the Company, in its sole discretion, so consents in writing, the Company’s
withholding of a number of shares to be delivered upon the exercise of the Stock Option, which
shares so withheld have an aggregate fair market value that equals (but does not exceed) the
required tax withholding payment; or (iv) any combination of (i), (ii), or (iii). The Company may,
in its sole discretion, withhold any such taxes from any other cash remuneration otherwise paid by
the Company to the Participant.




* * * * * * * *




 









 








2005 Long-Term Incentive Plan

Incentive Stock Option Agreement — Lovett

May 15, 2008

9




     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly
authorized officer, and the Participant, to evidence his consent and approval of all the terms
hereof, has duly executed this Agreement, as of the date specified in Section 1 hereof.



	 	 	 	 	 	 	 
	 	 	TOREADOR RESOURCES CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Charles J. Campise
 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:
	 	Charles J. Campise	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:
	 	Senior Vice President, Finance	 	 







	 	 	 	 	 	 	 
	 	 	PARTICIPANT	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Nigel J. Lovett	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:
	 	Nigel J. Lovett	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:
	 	13760 Noel Road, Suite 1100	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Dallas, TX 75240